<PAGE> 1
VANGUARD
NEW YORK INSURED
TAX-FREE FUND
Annual Report
November 30, 1996
THE VANGUARD GROUP: LINKING TRADITION AND INNOVATION
At Vanguard, we treasure our rich nautical heritage--even as we steer our
course toward the twenty-first century. Our Report cover reflects that blending
of tradition and innovation, of past, present, and future. The montage
includes a bronze medallion with a likeness of our namesake, HMS Vanguard (Lord
Nelson's flagship at The Battle of the Nile); a clock built circa 1816 in
Scotland, featuring a portrait of Nelson (who is also shown, accepting a
surrender, in a detail from a nineteenth-century engraving); and several views
of our recently completed campus, which is steeped in nautical imagery--from
our buildings named after Nelson's warships (Victory, Majestic, and Goliath are
three shown), to our artwork and ornamental compass rose.
<PAGE> 2
[PHOTO]
VANGUARD HAS ALWAYS STRIVED TO BE THE STANDARD-BEARER for mutual fund
disclosure, going well beyond the "letter of the law" in our shareholder
communications. During the past year, we raised the standard once again by
rewriting and reformatting our Fund prospectuses. They are designed to ensure
that prospective investors fully understand, before they make an investment,
each Fund's investment strategies, risks, and costs. In that spirit, we have
redesigned our Annual Reports to shareholders, which provide a comprehensive
discussion and analysis of the year's results in the context of each Fund's
investment objectives and policies. Since Vanguard has long been recognized for
the quality and content of these Fund Reports, our overriding objective was to
maintain the character of the previous Reports, while adding information to
assist shareholders in understanding the investment characteristics of their
Fund.
THE NEW FUND REPORTS INCLUDE A MESSAGE TO SHAREHOLDERS from Chairman John C.
Bogle and President John J. Brennan. This Message continues to provide a candid
assessment of the Fund's performance relative to an appropriate unmanaged
market benchmark and a peer group of mutual funds with similar investment
policies. It also reviews the principal factors contributing to--and detracting
from--the returns earned by the Fund. To help you evaluate your Fund's
current-year performance, the Message includes a discussion of the Fund's
long-term investment results, as well as a look ahead to the prospects for the
coming year. A recap of the financial markets, which had been included as part
of the Chairman's letter, now appears in The Markets In Perspective. This
overview covers the world's financial markets, putting the results of the
Fund's strategy in a global perspective.
THE PORTFOLIO PROFILE REPRESENTS AN ADDITION TO OUR FUND REPORTS. In this day
and age, many investors use detailed statistical information to evaluate their
mutual fund holdings, and our new Portfolio Profile furnishes shareholders with
comprehensive data on key characteristics--sector diversification, volatility,
top-ten holdings, among others--that ultimately define how a Fund is likely to
perform in various market environments. For this information to be used
effectively, we include a brief description of the profiled characteristics.
The Report From The Adviser (for our traditionally managed Funds) now covers
specific topics that we have defined as being the important ones for the
adviser to address--and we do our best to ensure that this Report is written in
the same simple and candid manner that characterizes all Vanguard
communications. Finally, each Adviser's Report will include an inset reminder
of the adviser's basic investment philosophy.
WE TRUST THAT THIS REDESIGNED FUND REPORT will continue to meet your need for a
fair, candid, and clear presentation of your Fund's investment results and a
thorough portfolio review. We welcome any comments that you might have at any
time regarding these Reports.
CONTENTS
A Message To
Our Shareholders
1
The Markets
In Perspective
4
Report From
The Adviser
6
Portfolio
Profile
8
Performance
Summary
10
Financial
Statements
11
Report Of
Independent
Accountants
22
Trustees And
Officers
INSIDE BACK COVER
<PAGE> 3
[PHOTO]
John C. Bogle
[PHOTO]
John J. Brennan
DEAR SHAREHOLDER,
The 1996 fiscal year for Vanguard New York Insured Tax-Free Fund,
which ended on November 30, proved notable for one important reason: Relative
stability returned to the municipal bond market for the first time in the past
four years.
Interest rates fluctuated in a fairly narrow range during the
year--responding to marked shifts in investor sentiment about the strength of
the U.S. economy and the specter of inflation--but on balance the yield on
long-term U.S. Treasury bonds increased only slightly and the yield available
on long-term tax-exempt bonds was essentially unchanged. In this calmer
environment, the return of our Fund exceeded the results of its competitive
fund group (+5.8% versus +4.6%). The table at right presents the Fund's
twelve-month return as well as its income and capital components.
The total return (capital change plus reinvested dividends) of the Fund is
based on a change in net asset value from $11.01 per share on November 30,
1995, to $10.99 per share on November 30, 1996, adjusted for dividends totaling
$0.569 per share from net investment income and a distribution of $.065 per
share from net realized capital gains.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------
INVESTMENT RETURNS
FISCAL YEAR ENDED NOVEMBER 30, 1996
-----------------------------------------
INCOME CAPITAL TOTAL
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
Vanguard New York
Insured Tax-Free Fund +5.4% +0.4% +5.8%
- ---------------------------------------------------------------------------------
</TABLE>
FISCAL 1996 PERFORMANCE OVERVIEW
In the taxable bond market, yields experienced some interim variability, but
ended the period just a bit higher than their beginning levels. Yields on
municipal bonds remained unchanged on balance at 5.7%, as investor concerns
about the prospect of a "flat tax" all but disappeared.
This environment of relative stability contrasted starkly with the three
previous years. During 1993, interest rates tumbled and bond prices surged,
only to reverse themselves in the rapidly rising interest rate environment of
1994. But in 1995, a remarkable about-face in the course of interest rates sent
bond prices soaring once again. The lesson is clear: While bond (and bond fund)
prices can fluctuate sharply over short periods, these price swings tend to be
offsetting over longer periods.
During fiscal 1996, when most municipal bond funds essentially earned
their coupons, the +5.8% annual total return for the New York Insured Tax-Free
Fund was significantly ahead of the +4.6% annual return for the average New
York insured municipal bond fund, but a hair behind the +5.9% return of the
Lehman Municipal Bond Index. This national Index is a tough standard for all
state tax-free funds, existing, as it does, only on paper, outside the "real
world" in which operating expenses and transaction costs are very much in
evidence.
For New York residents, the income earned by our Fund is exempt from
state, local, and federal income taxes. Given these tax advantages, investors
in the New York Insured Tax-Free Fund who are taxed at the highest federal and
state marginal tax rates can earn
1
<PAGE> 4
68% more after-tax income than they could in a comparable long-term taxable
bond fund. Put another way, for New York investors, a yield of 5.7% on a
tax-exempt long-term portfolio would be the equivalent of a 10.7% taxable
yield. The table at left presents a general comparison of the annual income
earned on tax-exempt and taxable securities as of November 30, 1996, assuming a
$100,000 investment.
Please note that this example ignores two important quality distinctions
between state-specific municipal bond funds and U.S. Treasury bond funds: (1)
U.S. Treasury bond funds hold solely Treasury securities, which are backed by
the full faith and credit of the U.S. government; and (2) state-specific
municipal bond funds incur a significant risk by concentrating their assets in
securities from a particular economic region. For Vanguard New York Insured
Tax-Free Fund, these added risks are substantially mitigated by private
insurance, which, in effect, guarantees the full payment of annual income and
the return of principal at maturity for the municipal bonds we hold.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
ILLUSTRATION OF INCOME ON A
HYPOTHETICAL $100,000 INVESTMENT
- -----------------------------------------------------------------
<S> <C>
Taxable gross income $6,400
Less taxes (46.7%) (3,000)
Net after-tax income 3,400
- -----------------------------------------------------------------
Tax-exempt income $5,700
- -----------------------------------------------------------------
Tax-exempt income advantage $2,300
- -----------------------------------------------------------------
Percentage advantage 68%
- -----------------------------------------------------------------
</TABLE>
Illustration assumes current yields (as of November 30, 1996) of 6.4% for
long-term U.S. Treasury bonds and 5.7% for long-term municipals. Tax adjustment
assumes federal tax rate of 39.6% and the top state tax rate of 7.1%; local
taxes not considered. The illustration is not intended to represent future
results.
LONG-TERM PERFORMANCE OVERVIEW
The accompanying table compares the longer-term performance of our Fund with
that of its mutual fund peer group. It also illustrates the "Vanguard
Advantage"--the performance edge our Fund provided over its competitive
standard.
Our expense ratio advantage over our typical competitor plays a key role
in our performance advantage. Our Fund maintains an expense ratio (expenses as
a percentage of average net assets) of 0.20%, compared with the 1.01% charged
by the average long-term state tax-free fund. This benefit over our competitors
has been available to our shareholders year after year with no sacrifice in
credit quality, and we expect it to continue. Our investment adviser, Vanguard
Fixed Income Group, also plays a key role in our success, managing the Fund
ably and maintaining a level of investment quality that is, in our judgment,
second to none in the field.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
10 YEARS ENDED NOVEMBER 30, 1996
---------------------------------
AVERAGE
VANGUARD COMPETITIVE VANGUARD
FUND FUND ADVANTAGE
- -----------------------------------------------------------------
<S> <C> <C> <C>
Vanguard New York
Insured Tax-Free Fund +7.4% +7.0% +0.4%
- -----------------------------------------------------------------
</TABLE>
IN SUMMARY
The past four years have illustrated the range of market environments that bond
fund investors may enjoy--or be forced to endure. Which of these environments
is normal for municipal bonds? The answer is probably: all of the above. In the
years ahead, there are sure to be more sharp rises in interest rates, more
sustained declines, and more years of relative tranquility. Indeed, this is
part and parcel of investing in bond funds. In the long
2
<PAGE> 5
run, however, the rate of interest income--"the coupon"--will be the dominant
source of our returns.
Whatever the year-to-year turbulence of the bond market, Vanguard New York
Insured Tax-Free Fund will do what it has always done: continue our focus on
providing returns that exceed those of competitive norms, even as we maintain
the highest standards of credit quality. As part of a long-term investment
program that includes stock funds, bond funds, and money market funds, the New
York Insured Tax-Free Fund should prove rewarding to investors.
/s/ John C. Bogle /s/ John J. Brennan
Chairman of the Board President
December 18, 1996
3
<PAGE> 6
THE MARKETS IN PERSPECTIVE: FISCAL YEAR ENDED NOVEMBER 30, 1996
[PHOTO]
U.S. EQUITY MARKETS
Few investors would have expected the stock market over the past 12 months to
come close to matching the 37.0% return of the prior 12. Yet when the past two
fiscal years are considered cumulatively, the Standard & Poor's 500 Composite
Stock Price Index has risen 75.1%. Not surprisingly, many of the factors that
drove the market higher in 1995 were also in place this year. Once again,
steady economic growth and low inflation were powerful motivators.
The equity markets were decidedly "un-equitable," however, when it came to
size and sectors. Companies with larger market values, such as those that
dominate the S&P 500 Index, prevailed. In fact, even within the Index, it was
the largest companies that turned in the best performance. The 50 biggest
companies in the S&P 500 Index (which account for roughly half its market
value) gained 31.8% in the fiscal year ended November 30, compared with an
increase of 27.9% for the entire Index. Looking at the S&P 500 Index's
performance by sector, financial stocks were strongest, closing the year with a
41.9% gain. Technology stocks were a close second, gaining 39.3%. Utilities,
plagued early in the year by higher interest rates and a rapidly changing
competitive landscape, eked out a 4.4% return, the lowest within the Index.
With the largest companies performing so well, it was difficult for
smaller issues to keep pace. This was evidenced in the considerable difference
between the 27.9% return of the S&P 500 Index and the 16.5% return of the
Russell 2000 Small Stock Index. Even for the smaller companies, there was a
significant range of performance among sectors. Energy stocks led the Russell
2000 Index with a 77.0% gain for the year. Here, rising prices, limited
exposure to the cyclical refining business, and a reduced number of competitors
created a favorable environment for the stocks. At the other end of the
spectrum were health-care stocks, which showed a loss of -0.4%.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------
AVERAGE ANNUALIZED RETURNS
PERIODS ENDED NOVEMBER 30, 1996
-----------------------------------
1 YEAR 3 YEARS 5 YEARS
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Equity
S&P 500 Index 27.9% 21.0% 18.2%
Russell 2000 Index 16.5 14.0 16.8
MSCI-EAFE Index 12.1 11.7 9.9
- -----------------------------------------------------------------------------
Fixed-Income
Lehman Aggregate Bond Index 6.1% 6.5% 7.9%
Lehman 10-Year Municipal
Bond Index 5.7 6.2 8.0
Salomon 90-Day U.S. Treasury Bills 5.3 5.0 4.4
- -----------------------------------------------------------------------------
Other
Consumer Price Index 3.2% 2.8% 2.9%
- -----------------------------------------------------------------------------
</TABLE>
U.S. FIXED-INCOME MARKETS
As the fiscal year ended, the 30-year U.S. Treasury yield of 6.4% was modestly
higher than its 6.1% level on November 30, 1995. The relatively small
difference in these figures belies the turmoil endured by the fixed-income
markets over the past 12 months.
When the fiscal year began, "Steady as she goes" was the common wisdom.
Modest economic growth and benign inflation were expected to continue, giving
the Federal Re-
4
<PAGE> 7
serve no reason to move interest rates higher. That complacency was shattered
by an exceptionally strong February jobs report, the first of what turned out
to be a succession of signs that in fact the economy was growing at a much
faster--and potentially inflation-inducing--pace. The bond market reacted
swiftly to compensate for the perceived risk: The 30-year Treasury yield jumped
from just below 6.0% in late December to 6.7% in late March. The next several
months saw a consistent pattern in which bond yields rose on the Friday of the
jobs-report release only to fall back by the middle of the month. In reality,
there was little bite to the bark. Inflation, as measured by the Consumer Price
Index, remained near an annualized rate of 3.2%. And, as the fiscal year
entered its final quarter, evidence once again pointed to more "acceptable"
levels of growth. That--plus the market's satisfaction with the national
election results and prospects for budget action--helped bonds finish the
fiscal year with a strong rally.
The rally enabled the longer-maturity sectors of the market to overcome
performance deficits and finish the year with positive returns. Although the
specter of the Federal Reserve Board loomed large during the year, in fact the
Board acted only twice, lowering the federal funds rate by a total of 0.5%.
Corporate bonds, mortgage-backed issues, and municipals were three
relatively bright spots over the past year. The strength in earnings that
benefited stock prices extended to the corporate bond sector as well. These
bonds, especially those of lower credit quality, performed well relative to
Treasuries as there appeared to be little risk of skipped interest payments or
bankruptcy against the good earnings backdrop. The stable-to-rising
interest-rate environment throughout most of the year benefited another large
segment of the bond market--mortgages--as the threat of refinancings receded.
Finally, municipal bonds outpaced their U.S. Treasury counterparts. The sector
was shielded to a certain extent from the inflation wars of the Treasury
market, and demand outstripped supply for much of the year.
INTERNATIONAL EQUITY MARKETS
Concern about U.S. Federal Reserve Board policy appeared to drive global
markets as much as it did those in the United States. In aggregate, the markets
rose 17.0%, as measured by the Morgan Stanley Capital International-Europe,
ustralasia, Far East Index. A stronger dollar reduced this return to 12.1% for
U.S.-based investors.
Regionally, Europe's 22.9% return overshadowed the 1.4% generated by the
Pacific Basin. Europe's major markets continued to work toward the economic
targets that must be attained by 1999 under the Maastricht Treaty. This
ongoing, albeit bumpy, effort kept the continent's economic growth modest and
gave investors confidence. The Pacific region, of course, was dominated by the
influence of the Japanese market. Despite evidence of a strengthening economy
early in the year, Japan's market was shadowed by lingering problems in the
banking and real estate sectors and by tepid interest on the part of Japanese
investors. The dollar's appreciation against the yen had a significant impact
on returns, turning the year's 7.1% gain in yen into a -4.5% loss in dollars.
In contrast, the returns for a number of other countries in the region were
quite strong: for example, Hong Kong, 38.2%, and Malaysia, 31.8% (in U.S.
dollars).
5
<PAGE> 8
REPORT FROM THE ADVISER
[PHOTO]
Yields on tax-exempt securities decreased slightly while yields on
short-term securities ended virtually unchanged in the 12 months ended November
30, 1996, the fiscal year for Vanguard New York Insured Tax-Free Fund.
Over the 12 months, the yield on high-grade, long-term municipal bonds
declined by 8 basis points, or 0.08 percentage point, from 5.74% to 5.66%. By
way of comparison, the yield on the benchmark 30-year U.S. Treasury bond
increased by 22 basis points, from 6.13% to 6.35%. However, these relatively
small changes obscure the volatility in both markets during the course of the
year.
During the first half, reports of a solid increase in economic activity
and robust employment gains fanned fears of inflation. In reaction, by June
the fixed-income market had driven up the yields on the 30-year Treasury bond
and on long-term, high-grade municipal bonds to 7.19% and 6.22%, respectively.
But as the economy cooled from its earlier torrid pace, investors grew more
confident that the Federal Reserve Board would not have to tighten monetary
policy, and yields fell back nearly to their levels at the start of the year.
"FLAT-TAX" TRAUMA
For municipal bonds, the issue of tax reform grew in importance in early 1996.
Various flat-tax proposals either directly or indirectly threatened the
tax-exempt privilege of municipal securities. In its basic form, a flat tax
would reduce the current hierarchy of income-tax rates to only one lower level
for all earned income. Unearned income (interest, dividends, and capital gains)
would not be taxed at all. Since all interest would be exempt from federal
income tax, municipal bond interest payments would no longer offer a special
tax benefit. Early in the fiscal year, concern about such proposals caused the
prices of municipal bonds to fall relative to those of taxable bonds, enabling
municipal investors to purchase high-grade, tax-exempt bonds with attractive
yields--as high as 94% of comparable U.S. Treasury obligations.
However, as a campaign issue, the complete overhaul of the federal tax
system bombed by early summer. The flat tax suffered a peaceful demise upon the
nomination of Bob Dole and was effectively buried with the reelection of
President Clinton. By the end of the year, with the flat-tax trauma a thing of
the past, the ratio of tax-exempt yields to taxable yields fell to 89%. The
relative outperformance of municipals came despite an increase late in the year
in the supply of new tax-exempt bond issues, which raised the
tax-exempt/taxable yield ratio from a low of 84% in August.
THE EXPENSE RATIO ADVANTAGE
For 1996, Vanguard New York Insured Tax-Free Fund provided a positive rate of
return, roughly commensurate with the dividends derived from interest income on
the Fund. Because market yields changed only slightly over the year, income was
the dominant component of total
INVESTMENT PHILOSOPHY
The Fund reflects a belief that a high level of current income exempt from
federal and New York state income taxes can be achieved by investing primarily
in long-term insured bonds issued by state, county, and municipal governments
in New York.
6
<PAGE> 9
return. In this environment, Vanguard's low expense ratio provided a powerful
advantage in maximizing the tax-exempt return to shareholders. The lower
expense ratio allows more investment income to flow directly to shareholders,
which translates into higher Fund returns. Over time, this has the powerful and
enduring effect of contributing to superior performance.
Looking ahead, we believe that the tax-exempt investment arena will
continue to provide above-average value to shareholders who seek a high-quality
investment with durable and attractive after-tax returns. This is especially
true for our State Tax-Free Portfolios, which offer the extra benefit of income
that is exempt from state, as well as federal, taxes.
Ian A. MacKinnon, Senior Vice President
Pamela W. Tynan, Principal
Reid O. Smith, Principal
John M. Carbone, Principal
Danine A. Mueller, Principal
Vanguard Fixed Income Group
December 16, 1996
7
<PAGE> 10
PORTFOLIO PROFILE: NEW YORK INSURED TAX-FREE FUND
NOVEMBER 30, 1996
This Profile provides a snapshot of the Fund's characteristics, compared where
appropriate to an unmanaged index. Key elements of this Profile are defined on
page 9.
<TABLE>
<CAPTION>
FINANCIAL ATTRIBUTES
- -----------------------------------------
<S> <C>
Number of Issues 213
Yield 5.0%
Yield to Maturity* 5.0%
Average Coupon 5.6%
Average Maturity 11.2 years
Average Quality Aaa
Average Duration 7.3 years
Expense Ratio 0.20%
</TABLE>
*After expenses.
<TABLE>
<CAPTION>
VOLATILITY MEASURES
- -----------------------------------------
NEW YORK INSURED LEHMAN
TAX-FREE FUND INDEX*
- -----------------------------------------
<S> <C> <C>
R-Squared 0.97 1.00
Beta 1.12 1.00
</TABLE>
*Lehman Municipal Bond Index.
<TABLE>
<CAPTION>
DISTRIBUTION BY MATURITY (% OF PORTFOLIO)
- -----------------------------------------
<S> <C>
Under 1 Year 7.8%
1-5 Years 11.9
5-10 Years 30.5
10-20 Years 36.6
20-30 Years 13.2
Over 30 Years --
- -----------------------------------------
Total 100.0%
</TABLE>
INVESTMENT FOCUS
- -----------------------------------------
[FIGURE]
<TABLE>
<CAPTION>
DISTRIBUTION BY CREDIT QUALITY (% OF PORTFOLIO)
- -----------------------------------------------
<S> <C>
Aaa 98.9%
Aa 1.1
A --
Baa --
Ba --
B --
Not Rated --
- -----------------------------------------------
Total 100.0%
</TABLE>
8
<PAGE> 11
[PHOTO]
AVERAGE COUPON. The average interest rate, expressed as a percentage of face
value, paid on the securities held by a portfolio.
AVERAGE DURATION. An estimate of how much a portfolio's share price will
fluctuate in response to a change in interest rates. To estimate the price
sensitivity of a portfolio, multiply its duration by the change in rates. If
interest rates rise by one percentage point, the share price of a portfolio
with an average duration of five years would decline by about 5%. If rates
decrease by a percentage point, the portfolio's share price would rise by 5%.
AVERAGE MATURITY. The average length of time until bonds held by the portfolio
reach maturity and are repaid. In general, the longer the average maturity, the
more a portfolio's share price will fluctuate in response to changes in market
interest rates.
AVERAGE QUALITY. An indicator of credit risk, this figure is the average of the
credit ratings assigned to the portfolio's securities holdings by credit-rating
agencies. Agencies assign credit ratings after appraising an issuer's ability
to meet its obligations. Quality is graded on a scale, with Aaa indicating the
most creditworthy bond issuers.
BETA. A measure of the magnitude of a portfolio's past share-price fluctuations
in relation to the fluctuations in the overall market (or appropriate market
index). The market, or index, has a beta of 1.00, so a portfolio with a beta of
1.20 would have seen its share price rise or fall by 12% when the overall
market rose or fell by 10%.
DISTRIBUTION BY CREDIT QUALITY. An indicator of the risk of default or other
credit problems on securities held by the portfolio.
DISTRIBUTION BY MATURITY. An indicator of interest-rate risk. In general, the
higher the concentration of longer-maturity issues, the more a portfolio's
share price will fluctuate in response to changes in interest rates.
EXPENSE RATIO. The percentage of a portfolio's average net assets used to pay
its annual administrative and advisory expenses. These expenses directly
reduce returns to investors. The average expense ratio in 1995 for state
tax-free bond funds was 1.01%; for state tax-free money market funds, the
figure was 0.59%.
INVESTMENT FOCUS. This grid indicates the focus of a portfolio in terms of two
attributes: average maturity (short, medium, or long) and average credit
quality (high, medium, or low).
NUMBER OF ISSUES. An indicator of diversification. The more separate issues a
portfolio holds, the less susceptible it is to a price decline stemming from
the problems of a particular issue.
R-SQUARED. A measure of how much of a portfolio's past returns can be explained
by the returns from the overall market (or its benchmark index). If a
portfolio's total return were precisely synchronized with the overall market's
return, its R-squared would be 1.00. If a portfolio's returns bore no
relationship to the market's returns, its R-squared would be 0.
YIELD. A snapshot of a portfolio's interest income. The yield, expressed as a
percentage of a portfolio's net asset value, is based on income earned by the
portfolio over the past 30 days and is annualized, or projected forward for the
coming year.
YIELD TO MATURITY. The rate of return an investor would receive if the
securities held by a portfolio were held to their maturity dates.
9
<PAGE> 12
PERFORMANCE SUMMARY: NEW YORK INSURED TAX-FREE FUND
All of the data on this page represent past performance, which cannot be used
to predict future returns that may be achieved by the Fund. Note, too, that
both share price and return can fluctuate widely so that an investment in the
Fund could lose money.
<TABLE>
<CAPTION>
TOTAL INVESTMENT RETURNS: 4/7/86-11/30/96
- ----------------------------------------------------
NEW YORK INSURED TAX-FREE FUND LEHMAN*
FISCAL CAPITAL INCOME TOTAL TOTAL
YEAR RETURN RETURN RETURN RETURN
- ----------------------------------------------------
<S> <C> <C> <C> <C>
1986 0.8% 4.3% 5.1% 5.0%
1987 -12.0 6.2 -5.8 -0.2
1988 4.4 7.2 11.6 10.6
1989 5.1 7.2 12.3 11.0
1990 -0.7 6.7 6.0 7.7
1991 3.9 7.0 10.9 10.3
1992 4.1% 6.5% 10.6% 10.0%
1993 6.4 6.0 12.4 11.1
1994 -11.5 5.1 -6.4 -5.2
1995 13.5 6.4 19.9 18.9
1996 0.4 5.4 5.8 5.9
- ----------------------------------------------------
</TABLE>
*Lehman Municipal Bond Index.
See Financial Highlights table on page 19 for dividend and capital gains
information for the past five years.
<TABLE>
<CAPTION>
CUMULATIVE PERFORMANCE: 11/30/86-11/30/96
- -------------------------------------------
<S> <C> <C> <C> <C>
1986 11 10000 10000 10000
1987 02 10256 10298 10332
1987 05 9224 9429 9662
1987 08 9569 9787 10069
1987 11 9418 9611 9987
1988 02 10128 10283 10603
1988 05 9893 10124 10529
1988 08 10196 10376 10762
1988 11 10513 10674 11048
1989 02 10805 10863 11262
1989 05 11371 11340 11741
1989 08 11465 11500 11944
1989 11 11802 11722 12265
1990 02 11824 11797 12417
1990 05 11981 11919 12600
1990 08 11974 12028 12711
1990 11 12510 12386 13209
1991 02 12845 12674 13561
1991 05 13198 13021 13870
1991 08 13555 13369 14210
1991 11 13870 13657 14565
1992 02 14256 14013 14916
1992 05 14606 14338 15231
1992 08 15144 14849 15796
1992 11 15345 15028 16025
1993 02 16493 15981 16969
1993 05 16612 16091 17054
1993 08 17209 16708 17723
1993 11 17251 16768 17801
1994 02 17323 16833 18084
1994 05 16972 16395 17648
1994 08 17160 16564 17754
1994 11 16153 15511 16870
1995 02 17788 16980 18250
1995 05 18497 17708 19071
1995 08 18610 17777 19325
1995 11 19367 18784 20057
1996 02 19591 18932 20266
1996 05 19203 18491 19943
1996 08 19571 18843 20338
1996 11 20506 19650 21220
- -------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
PERIODS ENDED NOVEMBER 30, 1996
--------------------------------- FINAL VALUE OF A
1 YEAR 5 YEARS 10 YEARS $10,000 INVESTMENT
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NEW YORK INSURED TAX-FREE FUND 5.84% 8.12% 7.45% $20,506
AVERAGE NEW YORK INSURED
MUNICIPAL FUND 4.61 7.36 6.99 19,650
LEHMAN MUNICIPAL BOND INDEX 5.88 7.84 7.81 21,220
- ----------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS: PERIODS ENDED 9/30/96*
- ---------------------------------------------------------------------------------------------------------
10 YEARS
INCEPTION -----------------------------------
DATE 1 YEAR 5 YEARS CAPITAL INCOME TOTAL
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
New York Insured Tax-Free Fund 4/7/86 6.14% 7.61% 1.15% 6.39% 7.54%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
*SEC rules require that we provide this average annual total return information
through the latest calendar quarter as well as for the Fund's fiscal year end.
10
<PAGE> 13
[PHOTO]
FINANCIAL STATEMENTS
NOVEMBER 30, 1996
STATEMENT OF NET ASSETS
This Statement provides a detailed list of the Fund's municipal bond holdings,
including each security's market value on the last day of the reporting period
and information on credit enhancements (insurance or letters of credit).
Securities are grouped and subtotaled according to their insured or non-insured
status. Other assets are added to, and liabilities are subtracted from, the
value of Total Municipal Bonds to calculate the Fund's Net Assets. Finally, Net
Assets are divided by the outstanding shares of the Fund to arrive at its share
price, or Net Asset Value (NAV) Per Share.
At the end of the Statement of Net Assets, you will find a table displaying
the composition of the Fund's net assets on both a dollar and per-share basis.
Undistributed Net Investment Income is usually zero because the Fund
distributes its net income to shareholders as a dividend each day. Any realized
gains must be distributed annually, so the bulk of net assets consists of Paid
in Capital (money invested by shareholders). The balance shown for Accumulated
Net Realized Gains usually approximates the amount available to distribute to
shareholders as taxable capital gains as of the statement date, but may differ
because certain investments or transactions may be treated differently for
financial statement and tax purposes. Any Accumulated Net Realized Losses, and
any cumulative excess of distributions over net realized gains, will appear as
negative balances. Unrealized Appreciation (Depreciation) is the difference
between the value of the Fund's investments and their cost, and reflects the
gains (losses) that would be realized if the Fund were to sell all of its
investments at their statement-date values.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
NEW YORK INSURED TAX-FREE FUND COUPON DATE (000) (000)
- ---------------------------------------------------------------------------------------------------------------------------------
MUNICIPAL BONDS (98.8%)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ISSUER INSURED (84.2%)
Albany County NY GO 5.00% 10/1/05 (3) $ 2,000 $ 2,057
Albany County NY GO 5.00% 10/1/06 (3) 3,150 3,224
Albany County NY GO 5.00% 10/1/12 (3) 4,400 4,319
Albany County NY GO 7.00% 1/15/05 (2) 1,250 1,361
Albany NY Muni. Water Finance Auth. 7.50% 12/1/17 (1) 2,080 2,249
Battery Park City NY Auth. 5.50% 11/1/26 (2) 11,750 11,630
Broome County NY Public Safety Fac. Project 5.25% 4/1/15 (1) 3,000 2,941
Buffalo & Erie NY Toll Bridge Auth. 6.00% 1/1/15 (1) 4,500 4,725
Buffalo NY General Improvement 6.75% 3/1/06 (1) 1,815 1,998
Buffalo NY General Improvement 6.75% 3/1/07 (1) 390 429
Buffalo NY General Improvement 6.75% 3/1/09 (1) 410 451
Buffalo NY General Improvement 6.75% 3/1/10 (1) 380 418
Buffalo NY General Improvement 6.75% 3/1/11 (1) 385 424
Buffalo NY Muni. Water Finance Auth. 5.75% 7/1/19 (4) 8,500 8,597
Buffalo NY Sewer Auth. System Rev. 5.00% 7/1/12 (3) 3,675 3,536
Buffalo NY Sewer Auth. System Rev. 5.25% 7/1/08 (3) 3,500 3,543
Duchess County NY Resource Recovery Solid Waste System 7.50% 1/1/09 (3) 2,000 2,204
Erie County NY GO 6.10% 1/15/06 (3) 1,865 2,059
Erie County NY GO 6.125% 1/15/07 (3) 1,660 1,846
Erie County NY GO 6.125% 1/15/09 (3) 735 814
Erie County NY GO 6.125% 1/15/10 (3) 735 812
Erie County NY GO 6.125% 1/15/11 (3) 735 812
Erie County NY GO 6.125% 1/15/12 (3) 735 811
Erie County NY Water Auth. Rev. 0.00% 12/1/05 (2) 3,000 1,971
Erie County NY Water Auth. Rev. 0.00% 12/1/06 (2) 6,915 4,290
Erie County NY Water Auth. Rev. 5.00% 12/1/04 (2) 5,920 6,101
Erie County NY Water Auth. Rev. 6.00% 12/1/08 (2) 1,600 1,732
Erie County NY Water Auth. Rev. VRDO 3.35% 12/4/96 (2) 5,800 5,800
Town of Hempstead NY GO 5.50% 8/1/11 (3) 2,450 2,503
</TABLE>
11
<PAGE> 14
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
NEW YORK INSURED TAX-FREE FUND COUPON DATE (000) (000)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Town of Hempstead NY GO 5.625% 2/1/11 (3) $ 890 $ 920
Town of Hempstead NY GO 5.625% 2/1/12 (3) 1,490 1,534
Town of Hempstead NY GO 5.625% 2/1/13 (3) 1,170 1,200
Huntington NY GO 5.50% 4/1/13 (3) 3,400 3,438
Huntington NY GO 6.70% 2/1/10 (3) 375 435
Huntington NY GO 6.70% 2/1/11 (3) 310 360
City of Jamestown NY GO 7.50% 5/15/02 (2) 110 127
City of Jamestown NY GO 7.50% 5/15/06 (2) 250 302
Metropolitan Transit Auth. of New York (Commuter Fac. Rev.) 5.50% 7/1/17 (1) 2,500 2,467
Metropolitan Transit Auth. of New York (Commuter Fac. Rev.) 5.625% 7/1/15 (4) 5,000 4,997
Metropolitan Transit Auth. of New York (Commuter Fac. Rev.) 6.10% 7/1/09 (1) 6,035 6,664
Metropolitan Transit Auth. of New York (Commuter Fac. Rev.) 6.25% 7/1/22 (1) 3,000 3,180
Metropolitan Transit Auth. of New York (Dedicated Petroleum Tax) 5.25% 4/1/26 (1) 6,000 5,825
Metropolitan Transit Auth. of New York (Dedicated Petroleum Tax) 6.00% 4/1/20 (1) 25,000 27,220
Metropolitan Transit Auth. of New York (Transp. Fac. Rev.) 5.40% 7/1/07 (3) 12,000 12,634
Metropolitan Transit Auth. of New York (Transp. Fac. Rev.) 6.00% 7/1/11 (2) 2,000 2,047
Metropolitan Transit Auth. of New York (Transp. Fac. Rev.) 6.10% 7/1/26 (4) 13,425 14,202
Metropolitan Transit Auth. of New York (Transp. Fac. Rev.) 7.00% 7/1/09 (2) 19,050 22,715
Monroe County NY GO (Rochester Water Dist.) 5.60% 6/1/04 (3) 1,235 1,320
Monroe County NY GO (Rochester Water Dist.) 5.70% 6/1/05 (3) 1,350 1,454
Monroe County NY GO (Rochester Water Dist.) 5.80% 6/1/06 (3) 1,340 1,452
Monroe County NY GO (Rochester Water Dist.) 5.90% 2/1/07 (3) 550 601
Montgomery, Ostego, Scholoharie Counties NY Solid Waste 5.25% 1/1/14 (1) 1,640 1,618
Mount Sinai NY Union Free School Dist. 6.20% 2/15/14 (2) 1,050 1,171
Mount Sinai NY Union Free School Dist. 6.20% 2/15/15 (2) 540 601
Nassau County NY Combined Sewer Dist. GO 4.70% 10/1/04 (3) 1,805 1,826
Nassau County NY Combined Sewer Dist. GO 4.80% 10/1/05 (3) 1,760 1,785
Nassau County NY Combined Sewer Dist. GO 4.90% 10/1/06 (3) 1,740 1,767
Nassau County NY Combined Sewer Dist. GO 5.00% 10/1/07 (3) 1,715 1,751
Nassau County NY Combined Sewer Dist. GO 5.00% 10/1/08 (3) 1,695 1,715
Nassau County NY Combined Sewer Dist. GO 5.00% 5/1/09 (3) 3,210 3,219
Nassau County NY Combined Sewer Dist. GO 5.00% 5/1/10 (3) 2,875 2,855
Nassau County NY Combined Sewer Dist. GO 5.00% 5/1/11 (3) 1,770 1,748
Nassau County NY Combined Sewer Dist. GO 5.00% 5/1/12 (3) 1,760 1,728
Nassau County NY Combined Sewer Dist. GO 5.35% 7/1/08 (1) 4,730 4,916
Nassau County NY Combined Sewer Dist. GO 5.35% 1/15/09 (1) 3,505 3,615
Nassau County NY Combined Sewer Dist. GO 5.35% 7/1/09 (1) 4,635 4,785
Nassau County NY Combined Sewer Dist. GO 5.875% 8/1/12 (3) 825 863
Nassau County NY Combined Sewer Dist. GO 6.20% 5/15/07 (1) 840 907
Nassau County NY Combined Sewer Dist. GO 6.20% 5/15/08 (1) 835 908
Nassau County NY Combined Sewer Dist. GO 6.25% 5/15/09 (1) 825 895
Nassau County NY Combined Sewer Dist. GO 6.25% 5/15/10 (1) 820 886
Nassau County NY GO 5.00% 11/1/97 (3) 7,825 7,925
Nassau County NY GO 5.125% 3/1/13 (2) 5,860 5,767
Nassau County NY GO 5.125% 3/1/14 (2) 5,900 5,770
Nassau County NY GO 5.50% 7/15/07 (1) 1,270 1,335
Nassau County NY GO 5.50% 7/15/08 (1) 1,300 1,361
Nassau County NY GO 5.50% 7/15/09 (1) 1,325 1,376
Nassau County NY GO 5.50% 7/15/10 (1) 1,345 1,387
Nassau County NY GO 5.50% 7/15/11 (1) 1,370 1,407
Nassau County NY GO 5.70% 8/1/11 (3) 2,000 2,091
Nassau County NY GO 5.75% 2/1/11 (1) 1,100 1,137
New York City NY Cultural Resources (Museum of Modern Art) 5.40% 1/1/06 (2) 805 840
New York City NY Cultural Resources (Museum of Modern Art) 5.40% 1/1/12 (2) 1,400 1,404
New York City NY Cultural Resources (Museum of Modern Art) 5.50% 1/1/07 (2) 840 879
New York City NY GO 5.75% 8/1/09 (3) 4,250 4,391
New York City NY GO 6.625% 8/1/13 (1) 675 749
New York City NY GO 6.95% 8/15/12 (1) 1,460 1,661
New York City NY GO 7.10% 2/1/09 (1) 5,000 5,621
New York City NY GO VRDO 4.05% 12/3/96 (1) 600 600
New York City NY Health & Hosp. Corp. 5.625% 2/15/13 (2) 23,400 23,589
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
New York City NY IDA (USTA Project) 6.375% 11/15/14 (4) $ 2,000 $ 2,177
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.35% 6/15/13 (1) 5,300 5,175
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.875% 6/15/12 (2) 20,000 21,449
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.875% 6/15/13 (2) 20,000 21,393
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 8.75% 6/15/97 (5)(Prere.) 2,500 2,618
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. VRDO 4.10% 12/3/96 (3) 2,800 2,800
New York State Dormitory Auth. (City Univ. of New York) 6.25% 7/1/19 (1) 4,485 4,754
New York State Dormitory Auth. (City Univ. of New York) 7.00% 7/1/14 (3) 20,700 22,728
New York State Dormitory Auth. (Colgate Univ.) 6.50% 7/1/01 (1)(Prere.) 1,350 1,498
New York State Dormitory Auth. (Fordham Univ.) 5.50% 7/1/23 (3) 10,150 10,010
New York State Dormitory Auth. (Fordham Univ.) 5.75% 7/1/15 (3) 1,500 1,525
New York State Dormitory Auth. (Fordham Univ.) 7.20% 7/1/15 (2) 710 784
New York State Dormitory Auth. (Foundling Charities Corp.) 6.50% 7/1/12 (1) 6,530 6,733
New York State Dormitory Auth. (Iona College) 5.25% 7/1/08 (1) 1,000 1,018
New York State Dormitory Auth. (Iona College) 5.35% 7/1/09 (1) 1,000 1,016
New York State Dormitory Auth. (Iona College) 7.625% 7/1/98 (1) 5,000 5,355
New York State Dormitory Auth. (Ithaca College) 6.25% 7/1/21 (1) 10,000 10,562
New York State Dormitory Auth. (Mt. Sinai School of Medicine) 6.75% 7/1/15 (1) 7,245 8,016
New York State Dormitory Auth. (New York Public Library) 0.00% 7/1/06 (1) 910 568
New York State Dormitory Auth. (New York Public Library) 0.00% 7/1/07 (1) 1,000 588
New York State Dormitory Auth. (New York Public Library) 0.00% 7/1/08 (1) 910 503
New York State Dormitory Auth. (New York Public Library) 0.00% 7/1/09 (1) 910 472
New York State Dormitory Auth. (New York Public Library) 0.00% 7/1/10 (1) 500 243
New York State Dormitory Auth. (New York Public Library) 0.00% 7/1/11 (1) 500 228
New York State Dormitory Auth. (New York Univ.) 6.00% 7/1/15 (3) 32,165 33,347
New York State Dormitory Auth. (Rensselaer Polytech. Institute) 6.50% 7/1/06 (3) 3,000 3,288
New York State Dormitory Auth. (School Dist.) 6.00% 7/1/15 (3) 2,675 2,733
New York State Dormitory Auth. (Siena College) 6.00% 7/1/11 (1) 1,500 1,565
New York State Dormitory Auth. (State Univ.) 5.25% 7/1/14 (2) 1,000 986
New York State Dormitory Auth. (State Univ.) 5.75% 7/1/07 (2) 2,250 2,405
New York State Dormitory Auth. (State Univ.) 5.75% 7/1/08 (2) 3,335 3,550
New York State Dormitory Auth. (State Univ.) 6.00% 7/1/09 (2) 1,590 1,729
New York State Dormitory Auth. (St. John's Univ.) 5.60% 7/1/16 (1) 2,500 2,513
New York State Dormitory Auth. (St. John's Univ.) 5.70% 7/1/26 (1) 9,230 9,347
New York State Dormitory Auth. (Union College) 5.75% 7/1/10 (3) 1,800 1,860
New York State Energy Research & Dev. Auth. PCR
(Niagara Mohawk) 6.625% 10/1/13 (3) 10,000 11,052
New York State Medical Care Fac. Finance Agency 8.00% 8/15/97 (7)(Prere.) 5,000 5,249
New York State Medical Care Fac. Finance Agency
(Mental Health Services) 5.50% 8/15/21 (3) 8,000 7,820
New York State Medical Care Fac. Finance Agency
(Mental Health Services) 6.00% 8/15/15 (1) 15,000 15,662
New York State Medical Care Fac. Finance Agency
(Mental Health Services) 6.375% 8/15/10 (3) 6,100 6,583
New York State Medical Care Fac. Finance Agency
(Mental Health Services) 7.40% 8/15/07 (1) 890 961
New York State Medical Care Fac. Finance Agency
(Sisters of Charity-Buffalo) 6.625% 11/1/18 (2) 5,500 6,032
New York State Thruway Auth. Rev. 5.00% 1/1/20 (1) 5,055 4,745
New York State Thruway Auth. Rev. 5.50% 1/1/23 (3) 6,800 6,680
New York State Thruway Auth. Rev. 6.00% 1/1/15 (3) 11,600 12,200
New York State Thruway Auth. Rev. 6.00% 1/1/25 (3) 14,250 14,919
New York State Thruway Auth. Rev. (Highway & Bridge Trust Fund) 5.30% 4/1/10 (1) 3,775 3,793
New York State Thruway Auth. Rev. (Highway & Bridge Trust Fund) 5.50% 4/1/15 (1) 12,480 12,479
New York State Thruway Auth. Rev. (Highway & Bridge Trust Fund) 5.80% 4/1/10 (2) 14,215 14,862
New York State Thruway Auth. Rev. (Highway & Bridge Trust Fund) 5.80% 4/1/11 (2) 8,635 8,996
</TABLE>
13
<PAGE> 16
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
NEW YORK INSURED TAX-FREE FUND COUPON DATE (000) (000)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
New York State Thruway Auth. Rev. (Highway & Bridge Trust Fund) 6.00% 4/1/09 (3) $ 5,000 $ 5,350
New York State Urban Dev. Corp. 5.375% 1/1/12 (1) 21,375 21,409
Niagara Falls NY Bridge Comm. 5.25% 10/1/15 (3) 5,000 4,976
Niagara Falls NY Bridge Comm. 6.25% 10/1/20 (3) 8,685 9,756
Niagara Falls NY Bridge Comm. 6.25% 10/1/21 (3) 9,230 10,391
North Hempstead NY GO 6.30% 4/1/08 (3) 2,055 2,316
North Hempstead NY GO 6.40% 4/1/10 (3) 1,500 1,698
North Hempstead NY GO 6.40% 4/1/11 (3) 2,075 2,351
North Hempstead NY Solid Waste Auth. 5.00% 2/1/12 (1) 3,370 3,269
Oyster Bay Public Improvement 5.40% 2/15/03 (1) 1,475 1,553
Oyster Bay Public Improvement 5.60% 2/15/05 (1) 1,000 1,068
Oyster Bay Public Improvement 5.70% 2/15/07 (1) 805 866
Oyster Bay Public Improvement 5.70% 2/15/09 (1) 980 1,043
Oyster Bay Public Improvement 5.70% 2/15/11 (1) 300 317
Rochester NY GO 4.25% 9/15/97 (2) 6,730 6,769
Rochester NY GO 5.70% 8/15/03 (2) 2,330 2,501
Rochester NY GO 5.70% 8/15/04 (2) 2,180 2,347
Smithtown NY GO 5.25% 4/1/06 (1) 1,000 1,038
Smithtown NY GO 5.45% 4/1/08 (1) 400 412
Suffolk County NY GO 4.50% 8/1/97 (2) 1,390 1,399
Suffolk County NY GO 5.00% 4/1/06 (1) 2,255 2,296
Suffolk County NY GO 5.00% 7/15/06 (3) 1,000 1,019
Suffolk County NY GO 5.10% 7/15/07 (3) 1,280 1,297
Suffolk County NY GO 5.20% 7/15/08 (3) 1,100 1,113
Suffolk County NY Water Auth. 5.10% 6/1/07 (1) 7,110 7,304
Suffolk County NY Water Auth. 5.25% 6/1/04 (2)(Prere.) 21,305 22,313
Suffolk County NY Water Auth. 5.25% 6/1/10 (2)(ETM) 3,790 3,750
Suffolk County NY Water Auth. 5.25% 6/1/11 (2)(ETM) 2,380 2,346
Suffolk County NY Water Auth. 5.25% 6/1/12 (2)(ETM) 4,290 4,196
Suffolk County NY Water Auth. 5.25% 6/1/17 (2) 1,695 1,695
Suffolk County NY Water Auth. 5.75% 6/1/02 (2)(Prere.) 1,100 1,192
Suffolk County NY Water Auth. 5.75% 6/1/13 (2) 7,340 7,515
Triborough Bridge & Tunnel Auth. NY 5.50% 1/1/17 (2) 18,485 18,241
City of Yonkers NY School Dist. GO 5.375% 8/1/97 (3) 685 693
City of Yonkers NY School Dist. GO 5.60% 8/1/09 (3) 565 587
City of Yonkers NY School Dist. GO 5.70% 8/1/10 (3) 545 567
City of Yonkers NY School Dist. GO 5.75% 8/1/11 (3) 500 521
City of Yonkers NY School Dist. GO 5.80% 8/1/12 (3) 500 521
OUTSIDE NEW YORK:
Puerto Rico Electric Power Auth. Rev. 6.50% 7/1/06 (1) 10,000 11,443
Puerto Rico Public Building Auth. 0.00% 7/1/03 (3) 4,000 2,995
---------
807,602
---------
PORTFOLIO INSURED (0.1%)
New York State Energy Research & Dev.
(Niagara Mohawk Power Corp.) 8.875% 11/1/25 1,100 1,118
---------
SECONDARY MARKET INSURED (7.8%)
Municipal Assistance Corp. for New York City NY 6.00% 7/1/08 (3) 22,350 23,348
New York City NY Muni. Water Finance Auth.
Water & Sewer System Rev. 5.00% 6/15/17 (3) 4,000 3,784
New York State Dormitory Auth. (City Univ.) 5.75% 7/1/09 (3) 3,750 3,996
New York State Dormitory Auth. (City Univ.) 5.75% 7/1/11 (3) 5,950 6,256
New York State Dormitory Auth. (Cornell Univ.) 7.25% 7/1/12 (1) 1,175 1,300
New York State Dormitory Auth. (State Univ.) 6.00% 5/15/17 (2) 5,600 5,717
New York State Medical Care Fac. Finance Agency
(Mental Health Services) 5.375% 2/15/14 (1) 5,000 4,931
Port Auth. of New York & New Jersey 6.50% 1/15/26 (1) 1,500 1,621
Triborough Bridge & Tunnel Auth. NY 5.00% 1/1/17 (2) 105 99
Triborough Bridge & Tunnel Auth. NY 5.00% 1/1/17 (3) 395 374
Triborough Bridge & Tunnel Auth. NY 5.50% 1/1/19 (2) 4,000 3,944
</TABLE>
14
<PAGE> 17
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
FACE MARKET
MATURITY AMOUNT VALUE*
COUPON DATE (000) (000)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Triborough Bridge & Tunnel Auth. NY 6.00% 1/1/12 (1) $ 7,805 $ 8,512
Triborough Bridge & Tunnel Auth. NY 6.75% 1/1/09 (2) 3,000 3,484
Triborough Bridge & Tunnel Auth. NY 6.875% 1/1/15 (3) 7,000 7,717
75,083
NON-INSURED (6.7%)
Duchess County NY BAN 4.50% 7/31/97 4,400 4,426
New York City NY Cultural Resources VRDO (Carnegie Hall) 3.40% 12/4/96 LOC 600 600
New York City NY GO VRDO 3.75% 12/4/96 LOC 4,400 4,400
New York City NY GO VRDO 4.10% 12/3/96 LOC 1,500 1,500
New York Environmental Fac. Water PCR 5.55% 7/15/09 2,000 2,080
New York Local Govt. Assistance Corp. VRDO 3.70% 12/4/96 LOC 5,000 5,000
New York State Dormitory Auth. (Columbia Univ.) 5.75% 7/1/15 11,965 12,175
New York State Power Auth. 7.00% 1/1/09 6,000 6,312
Onondaga County NY Public Improvements 5.875% 2/15/06 1,580 1,712
Onondaga County NY Public Improvements 5.875% 2/15/08 2,475 2,668
Port Auth. of New York & New Jersey VRDO 4.15% 12/3/96 1,100 1,100
Port Washington NY Union Free School Dist. GO 4.375% 6/26/97 4,600 4,620
Port Washington NY Union Free School Dist. GO 4.40% 6/26/97 5,000 5,023
Roslyn NY Union Free School Dist. TAN 4.25% 6/26/97 1,000 1,003
Westchester County NY GO 6.70% 11/1/08 3,250 3,812
Westchester County NY GO 6.70% 11/1/09 3,645 4,275
White Plains NY BAN 4.25% 7/25/97 1,335 1,341
OUTSIDE NEW YORK:
Puerto Rico Govt. Dev. Bank VRDO 3.20% 12/4/96 LOC 2,000 2,000
64,047
---------
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL MUNICIPAL BONDS (COST $888,677) 947,850
- ---------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS AND LIABILITIES (1.2%)
- ---------------------------------------------------------------------------------------------------------------------------------
Other Assets--Note B 18,955
Liabilities (7,506)
11,449
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS (100%)
- ---------------------------------------------------------------------------------------------------------------------------------
Applicable to 87,325,569 outstanding shares of beneficial interest
(unlimited authorization--no par value) $959,299
=================================================================================================================================
NET ASSET VALUE PER SHARE $10.99
=================================================================================================================================
</TABLE>
*See Note A in Notes to Financial Statements.
For explanations of abbreviations and other references, see page 16.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
AT NOVEMBER 30, 1996, NET ASSETS CONSISTED OF:
- ---------------------------------------------------------------------------------------------------------------------------------
AMOUNT PER
(000) SHARE
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Paid in Capital $897,091 $10.28
Undistributed Net Investment Income -- --
Accumulated Net Realized Gains--Note E 2,889 .03
Unrealized Appreciation--Note F
Investment Securities 59,173 .68
Futures Contracts 146 --
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS $959,299 $10.99
=================================================================================================================================
</TABLE>
15
<PAGE> 18
KEY TO ABBREVIATIONS
BAN--Bond Anticipation Note.
COP--Certificate of Participation.
CP--Commercial Paper.
GO--General Obligation Bond.
IDA--Industrial Development Authority Bond.
IDR--Industrial Development Revenue Bond.
PCR--Pollution Control Revenue Bond.
RAN--Revenue Anticipation Note.
TAN--Tax Anticipation Note.
TOB--Tender Option Bond.
TRAN--Tax Revenue Anticipation Note.
VRDO--Variable Rate Demand Obligation.
(ETM)--Escrowed to Maturity.
(Prere.)--Prerefunded.
Scheduled principal and interest payments are guaranteed by:
(1) MBIA (Municipal Bond Insurance Association).
(2) AMBAC (AMBAC Indemnity Corporation).
(3) FGIC (Financial Guaranty Insurance Company).
(4) FSA (Financial Security Assurance).
(5) BIGI (Bond Investors Guaranty Insurance).
(6) Connie Lee Inc.
(7) FHA (Federal Housing Authority).
The insurance does not guarantee the market value of the municipal bonds.
LOC--Scheduled principal and interest payments are guaranteed by bank letter of
credit.
16
<PAGE> 19
STATEMENT OF OPERATIONS
This Statement shows interest earned by the Fund during the reporting period,
and details the operating expenses charged to the Fund. These expenses directly
reduce the amount of investment income available to pay to shareholders as
tax-exempt income dividends. This Statement also shows any Net Gain (Loss)
realized on the sale of investments, and the increase or decrease in the
Unrealized Appreciation (Depreciation) on investments during the period. If the
Fund invested in futures contracts during the period, the results of these
investments are shown separately.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
NEW YORK INSURED TAX-FREE FUND
YEAR ENDED NOVEMBER 30, 1996
(000)
- --------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
INCOME
Interest $48,990
----------
Total Income 48,990
----------
EXPENSES
The Vanguard Group--Note B
Investment Advisory Services 110
Management and Administrative 1,420
Marketing and Distribution 196
Insurance Expense 16
Custodian Fees 21
Auditing Fees 7
Shareholders' Reports 35
Annual Meeting and Proxy Costs 6
Trustees' Fees and Expenses 3
----------
Total Expenses 1,814
Expenses Paid Indirectly--Note C (21)
----------
Net Expenses 1,793
- --------------------------------------------------------------------------------------
NET INVESTMENT INCOME 47,197
- --------------------------------------------------------------------------------------
REALIZED NET GAIN
Investment Securities Sold 1,190
Futures Contracts 2,583
- --------------------------------------------------------------------------------------
REALIZED NET GAIN 3,773
- --------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION)
Investment Securities 725
Futures Contracts (20)
- --------------------------------------------------------------------------------------
CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) 705
- --------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $51,675
======================================================================================
</TABLE>
17
<PAGE> 20
STATEMENT OF CHANGES IN NET ASSETS
This Statement shows how the Fund's total net assets changed during the two
most recent reporting periods. The Operations section summarizes information
that is detailed in the Statement of Operations. Because the Fund distributes
its income to shareholders each day, the amounts of Distributions--Net
Investment Income generally equal the net income earned as shown under the
Operations section. The amounts of Distributions--Realized Capital Gain may not
match the capital gains shown in the Operations section, because distributions
are determined on a tax basis and may be made in a period different from the
one in which the gains were realized on the financial statements. The Capital
Share Transactions section shows the amount shareholders invested in the Fund,
either by purchasing shares or by reinvesting distributions, and the amounts
redeemed. The corresponding numbers of Shares Issued and Redeemed are shown at
the end of the Statement.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
NEW YORK INSURED
TAX-FREE FUND
YEAR ENDED NOVEMBER 30,
------------------------------
1996 1995
(000) (000)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
INCREASE IN NET ASSETS
OPERATIONS
Net Investment Income $ 47,197 $ 42,840
Realized Net Gain 3,773 2,683
Change in Unrealized Appreciation (Depreciation) 705 92,901
------------------------------
Net Increase in Net Assets Resulting from Operations 51,675 138,424
------------------------------
DISTRIBUTIONS
Net Investment Income (47,197) (42,840)
Realized Capital Gain (5,071) --
------------------------------
Total Distributions (52,268) (42,840)
------------------------------
CAPITAL SHARE TRANSACTIONS(1)
Issued 212,722 192,402
Issued in Lieu of Cash Distributions 38,644 31,309
Redeemed (150,791) (154,905)
------------------------------
Net Increase from Capital Share Transactions 100,575 68,806
- ----------------------------------------------------------------------------------------------------------
Total Increase 99,982 164,390
- ----------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of Year 859,317 694,927
------------------------------
End of Year $959,299 $859,317
==========================================================================================================
(1)Shares Issued (Redeemed)
Issued 19,759 18,283
Issued in Lieu of Cash Distributions 3,577 2,958
Redeemed (14,047) (14,879)
------------------------------
Net Increase in Shares Outstanding 9,289 6,362
==========================================================================================================
</TABLE>
18
<PAGE> 21
FINANCIAL HIGHLIGHTS
This table summarizes the Fund's investment results and distributions to
shareholders on a per-share basis. It also presents the Fund's Total Return and
shows net investment income and expenses as percentages of average net assets.
These data will help you assess: the variability of the Fund's net income and
total returns from year to year; the relative contributions of net income and
capital gains to the Fund's total return; how much it costs to operate the
Fund; and the extent to which the Fund tends to distribute capital gains. The
table also shows the Portfolio Turnover Rate, a measure of trading activity. A
turnover rate of 100% means that the average security is held in the Fund for
one year.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
NEW YORK INSURED TAX-FREE FUND
YEAR ENDED NOVEMBER 30,
---------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT EACH YEAR 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR $11.01 $ 9.70 $10.97 $10.45 $10.04
INVESTMENT OPERATIONS
Net Investment Income .569 .581 .588 .594 .631
Net Realized and Unrealized Gain (Loss) on Investments .045 1.310 (1.258) .665 .410
Total from Investment Operations .614 1.891 (.670) 1.259 1.041
---------------------------------------------------------------
DISTRIBUTIONS
Dividends from Net Investment Income (.569) (.581) (.588) (.594) (.631)
---------------------------------------------------------------
Distributions from Realized Capital Gains (.065) -- (.012) (.145) --
---------------------------------------------------------------
Total Distributions (.634) (.581) (.600) (.739) (.631)
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF YEAR $10.99 $11.01 $ 9.70 $10.97 $10.45
===========================================================================================================================
TOTAL RETURN 5.84% 19.90% - 6.37% 12.42% 10.63%
===========================================================================================================================
RATIOS/SUPPLEMENTAL DATA
Net Assets, End of Year (Millions) $959 $859 $695 $807 $574
Ratio of Total Expenses to Average Net Assets 0.20% 0.22% 0.22% 0.19% 0.23%*
Ratio of Net Investment Income to Average Net Assets 5.28% 5.51% 5.60% 5.47% 6.11%
Portfolio Turnover Rate 5% 10% 20% 10% 28%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
*Insurance expense represents 0.01%.
19
<PAGE> 22
NOTES TO FINANCIAL STATEMENTS
Vanguard New York Insured Tax-Free Fund is registered under the Investment
Company Act of 1940 as an open-end investment company, or mutual fund. The Fund
invests in debt instruments of municipal issuers whose ability to meet their
obligations may be affected by economic and political developments in the state
of New York.
A. The following significant accounting policies conform with generally
accepted accounting principles for mutual funds. The Fund consistently follows
such policies in preparing its financial statements.
1. SECURITY VALUATION: Bonds, and temporary cash investments acquired more
than 60 days to maturity, are valued using the latest bid prices or using
valuations based on a matrix system (which considers such factors as security
prices, yields, maturities, and credit ratings), both as furnished by
independent pricing services. Other temporary cash investments are valued at
amortized cost, which approximates market value.
2. FEDERAL INCOME TAXES: The Fund intends to continue to qualify as a
regulated investment company and distribute all of its income. Accordingly, no
provision for federal income taxes is required in the financial statements.
3. FUTURES CONTRACTS: The Fund may use Municipal Bond Index, U.S. Treasury
Bond, and U.S. Treasury Note futures contracts, with the objectives of
enhancing returns, managing interest-rate risk, maintaining liquidity,
diversifying credit risk and minimizing transaction costs. The Fund may
purchase or sell futures contracts instead of bonds to take advantage of
pricing differentials between the futures contracts and the underlying bonds.
The Fund may also seek to take advantage of price differences among bond market
sectors by simultaneously buying futures (or bonds) of one market sector and
selling futures (or bonds) of another sector. Futures contracts may also be
used to simulate a fully invested position in the underlying bonds while
maintaining a cash balance for liquidity. The primary risks associated with the
use of futures contracts are imperfect correlation between changes in market
values of bonds held by the Fund and the prices of futures contracts, and the
possibility of an illiquid market.
Futures contracts are valued based upon their quoted daily settlement
prices. The aggregate principal amounts of the contracts are not recorded in
the financial statements. Fluctuations in the value of the contracts are
recorded in the Statement of Net Assets as an asset (liability) and in the
Statement of Operations as unrealized appreciation (depreciation) until the
contracts are closed, when they are recorded as realized futures gains
(losses).
4. DISTRIBUTIONS: Distributions from net investment income are declared
daily and paid on the first business day of the following month. Annual
distributions from realized capital gains, if any, are recorded on the
ex-dividend date.
5. OTHER: Security transactions are accounted for on the date securities
are bought or sold. Costs used to determine realized gains (losses) on the sale
of investment securities are those of the specific securities sold. Premiums
and original issue discounts are amortized and accreted, respectively, to
interest income over the lives of the respective securities.
B. The Vanguard Group furnishes at cost investment advisory, corporate
management, administrative, marketing, and distribution services. The costs of
such services are allocated to the Fund under methods approved by the Board of
Trustees. At November 30, 1996, the Fund had contributed capital of $87,000 to
Vanguard (included in Other Assets), representing 0.4% of Vanguard's
capitalization. The Fund's trustees and officers are also directors and
officers of Vanguard.
C. The Fund's custodian bank has agreed to reduce its fees when the Fund
maintains cash on deposit in the non-interest-bearing custody account. For the
year ended November 30, 1996, custodian fee offset arrangements reduced
expenses by $21,000.
20
<PAGE> 23
D. During the year ended November 30, 1996, the Fund purchased $151,430,000 of
investment securities and sold $39,304,000 of investment securities, other than
temporary cash investments.
E. Capital gains distributions are determined on a tax basis and may differ
from realized capital gains for financial reporting purposes due to differences
in the timing of realization of gains. For federal income tax purposes, the
Fund had $3,526,000 of capital gains available for distribution at November 30,
1996.
F. At November 30, 1996, net unrealized appreciation of investment securities
for financial reporting and federal income tax purposes was $59,173,000,
consisting of unrealized gains of $59,302,000 on securities that had risen in
value since their purchase and $129,000 in unrealized losses on securities that
had fallen in value since their purchase.
At November 30, 1996, the aggregate settlement value of open futures
contracts expiring in March 1997 and the related unrealized appreciation were:
<TABLE>
<CAPTION>
------------------------------------------------------------------------
(000)
----------------------------------
AGGREGATE
NUMBER OF SETTLEMENT UNREALIZED
FUTURES CONTRACTS LONG CONTRACTS VALUE APPRECIATION
------------------------------------------------------------------------
<S> <C> <C> <C>
U.S. Treasury Bond 175 $20,278 $146
------------------------------------------------------------------------
</TABLE>
Unrealized appreciation on open futures contracts is required to be treated
as realized gain for federal tax purposes. The market value of securities
deposited as initial margin for open futures contracts was $5,962,000.
21
<PAGE> 24
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and
Board of Trustees of
Vanguard New York Insured Tax-Free Fund
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Vanguard New York Insured Tax-Free Fund (the "Fund") at November 30, 1996, and
the results of its operations, the changes in its net assets and the financial
highlights for each of the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at November 30, 1996 by
correspondence with the custodian and the application of alternative auditing
procedures, provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Thirty South Seventeenth Street
Philadelphia, Pennsylvania 19103
December 31, 1996
22
<PAGE> 25
SPECIAL 1996 TAX INFORMATION (UNAUDITED)
VANGUARD NEW YORK INSURED TAX-FREE FUND
This information for the fiscal year ended November 30, 1996, is included
pursuant to provisions of the Internal Revenue Code.
The Fund designates $2,380,000 as capital gain dividends (from net
long-term capital gains), which will be distributed in December 1996.
The Fund designates 100% of its income dividends as exempt-interest
dividends.
All comparative mutual fund data are from Lipper Analytical Services, Inc. or
Morningstar unless otherwise noted.
23
<PAGE> 26
TRUSTEES AND OFFICERS
JOHN C. BOGLE, Chairman of the Board and Director of The Vanguard Group, Inc.
and of each of the investment companies in The Vanguard Group.
JOHN J. BRENNAN, President, Chief Executive Officer, and Director of The
Vanguard Group, Inc. and of each of the investment companies in The
Vanguard Group.
ROBERT E. CAWTHORN, Chairman Emeritus and Director of Rhone-Poulenc Rorer Inc.;
Director of Sun Company, Inc. and Westinghouse Electric Corp.
BARBARA BARNES HAUPTFUHRER, Director of The Great Atlantic and Pacific Tea Co.,
Alco Standard Corp., Raytheon Co., Knight-Ridder, Inc., and
Massa-chusetts Mutual Life Insurance Co.
BURTON G. MALKIEL, Chemical Bank Chairman's Professor of Economics, Princeton
University; Director of Prudential Insurance Co. of America, Amdahl
Corp., Baker Fentress & Co., The Jeffrey Co., and Southern New England
Communications Co.
ALFRED M. RANKIN, JR., Chairman, President, and Chief Executive Officer of
NACCO Industries, Inc.; Director of NACCO Industries, The BFGoodrich
Co., and The Standard Products Co.
JOHN C. SAWHILL, President and Chief Executive Officer of The Nature
Conservancy; formerly, Director and Senior Partner of McKinsey & Co.
and President of New York University; Director of Pacific Gas and
Electric Co., Procter & Gamble Co., and NACCO Industries.
JAMES O. WELCH, Jr., Retired Chairman of Nabisco Brands, Inc.; retired Vice
Chairman and Director of RJR Nabisco; Director of TECO Energy, Inc.
and Kmart Corp.
J. LAWRENCE WILSON, Chairman and Chief Executive Officer of Rohm & Haas Co.;
Director of Cummins Engine Co.; Trustee of Vanderbilt University.
OTHER FUND OFFICERS
RAYMOND J. KLAPINSKY, Secretary; Senior Vice President and Secretary of The
Vanguard Group, Inc.; Secretary of each of the investment companies in
The Vanguard Group.
RICHARD F. HYLAND, Treasurer; Principal of The Vanguard Group, Inc.; Treasurer
of each of the investment companies in The Vanguard Group.
KAREN E. WEST, Controller; Principal of The Vanguard Group, Inc.; Controller of
each of the investment companies in The Vanguard Group.
OTHER VANGUARD OFFICERS
ROBERT A. DISTEFANO, Senior Vice President, Information Technology.
JAMES H. GATELY, Senior Vice President,
Individual Investor Group.
IAN A. MACKINNON, Senior Vice President,
Fixed Income Group.
F. WILLIAM MCNABB III, Senior Vice President, Institutional.
RALPH K. PACKARD, Senior Vice President and
Chief Financial Officer.
[VANGUARD LOGO]
Please send your comments to us at:
Post Office Box 2600, Valley Forge, Pennsylvania 19482
Fund Information: 1-800-662-7447
Individual Account Services: 1-800-662-2739
Institutional Investor Services: 1-800-523-1036
[email protected] http://www.vanguard.com
All Vanguard Funds are offered by prospectus only. Prospectuses contain more
complete information on advisory fees, distribution charges, and other expenses
and should be read carefully before investing or sending money. Prospectuses
may be obtained directly from The Vanguard Group.
(C) 1996 Vanguard Marketing Corporation, Distributor
<PAGE> 27
THE VANGUARD FAMILY OF FUNDS
EQUITY AND BALANCED FUNDS
GROWTH AND INCOME FUNDS
Vanguard/Windsor Fund
Vanguard/Windsor II
Vanguard Equity Income Fund
Vanguard Quantitative Portfolios
Vanguard Selected Value Portfolio
Vanguard/Trustees' Equity-U.S. Portfolio
Vanguard Convertible Securities Fund
BALANCED FUNDS
Vanguard/Wellington Fund
Vanguard/Wellesley Income Fund
Vanguard STAR Portfolio
Vanguard Asset Allocation Fund
Vanguard LifeStrategy Portfolios
GROWTH FUNDS
Vanguard/Morgan Growth Fund
Vanguard/PRIMECAP Fund
Vanguard U.S. Growth Portfolio
AGGRESSIVE GROWTH FUNDS
Vanguard Explorer Fund
Vanguard Specialized Portfolios
Vanguard Horizon Fund
INTERNATIONAL FUNDS
Vanguard International Growth Portfolio
Vanguard/Trustees' Equity-International
Portfolio
INDEX FUNDS
Vanguard Index Trust
Vanguard Tax-Managed Fund
Vanguard Balanced Index Fund
Vanguard Bond Index Fund
Vanguard International Equity Index Fund
Vanguard Total International Portfolio
FIXED-INCOME FUNDS
Money Market Funds
Vanguard Money Market Reserves
Vanguard Admiral Funds
INCOME FUNDS
Vanguard Fixed Income Securities Fund
Vanguard Admiral Funds
Vanguard Preferred Stock Fund
TAX-EXEMPT MONEY MARKET FUNDS
Vanguard Municipal Bond Fund
Vanguard State Tax-Free Funds
(CA, NJ, OH, PA)
TAX-EXEMPT INCOME FUNDS
Vanguard Municipal Bond Fund
Vanguard State Tax-Free Funds
(CA, FL, NJ, NY, OH, PA)
Q760-11/96
